Findings of the Appraisal Standards Review
This chapter of the report addresses the findings, commendations and recommendations from the appraisal standards review of the Jack County Appraisal District in five sections:
The quality of the local property tax system depends largely on the appraisal district's board of directors. Individuals serving on the board of directors bring to the board knowledge, judgment and expertise in establishing policies and procedures for the district's organization and operation.
The appraisal district was formed in 1980 and produced its first appraisal roll in 1982. The Jack CAD Board of Directors consists of 8 members, including the county tax assessor-collector who is an elected official. Members of the board are listed in Exhibit 4.
Board of Directors Members
Board Member Represents Length of Service Nelson Oliver, Chairman Jacksboro ISD 14 years Gene Wise, Vice-chairman Perrin-Whitt ISD 5 years Lynn Clay, Secretary Jacksboro ISD 5 years George Knierim Bryson ISD First year Keri Nebgen Jacksboro ISD First year Morris Pruit City of Jacksboro First year Floyd Easter Jack County 4 years Gaye Low County Tax Assessor-Collector 4 years Source: Jack CAD, March 2005.
The Board of Directors has the following primary responsibilities:
- Establish the appraisal district's appraisal office;
- Adopt the appraisal district's annual operating budget;
- Contract for necessary services;
- Hire a chief appraiser;
- Hire a taxpayer liaison officer (districts in counties having a population of over 125,000);
- Appoint appraisal review board members; and
- Make general policy on the appraisal district's operation.
The Board of Directors hires a chief appraiser as the chief operating officer of the district.
The Board of Directors received a written survey about board activities. Two of the eight board members responded. The survey was broken down into board policies and procedures, chief appraiser and staff, property appraisals, appraisal review boards, and budgeting and financial management. The board members who responded gave the board, the district and the staff high marks. One board member specifically complimented the chief appraiser and the staff for the fine work that they do.
Section 6.063, Tax Code, requires appraisal districts to undergo, at least annually, an audit of their financial affairs by an independent certified public accountant. The Tax Code also makes the report of the audit a public record.
Financial audits have been prepared in accordance with Section 6.063 of the Property Tax Code. Birdwell, Quinn & Company, P. C., which is a certified public accounting firm in Jacksboro, conducted the appraisal district's 2002 and 2003 financial audits. The financial auditor's report to the appraisal district board of directors stated that the appraisal district's financial records fairly represent the district's financial position. The report contained no material weaknesses in the appraisal district's internal controls or the reporting of the CAD's financial records.
The appraisal district's budget does not comply with the provisions of Section 6.06, Tax Code, that require detailed information about employee benefits and capitol expenditures.
The Jack CAD 2005 budget hearing was July 13, 2004. The board minutes of the hearing indicate that there were no comments on the budget and the hearing subsequently adjourned. The board adopted the 2005 budget at its meeting later that day.
Under interlocal agreements, the Jack CAD serves as the tax collector for six of the district's member taxing units. The district's budgets include planned expenditures for the collection function. The reviewer examined copies of the 2004 and 2005 budgets. Both budgets include a list of line items for which the appraisal district allocated funds for the year and the portion of the budget and line items used for the district's tax collection duties. The budgets, however, are missing the amount of benefits paid for each position and a list of each capitol expenditure as required by Section 6.06.
Section 6.06 requires each appraisal district budget to include a listing of each proposed position, including the salary and benefits for the position, each proposed capital expenditure and an estimate of the amount of the budget allocated to each taxing unit. Section 6.06 also requires the appraisal district board of directors to hold a public hearing to consider the budget. Taxing units are required to ratify the budget and to maintain a copy of it for public inspection at their principal administrative office.
Budgets are planning tools that can be helpful in communicating appraisal district activities through spending. The budget should clearly communicate the purposes of all proposed spending. These budgets provide taxing units information for about planned spending, but they are not in full compliance with the requirements of Section 6.06, Tax Code.
The budgets are summarized in Exhibit 5 and Exhibit 6.
Jack CAD Budget for 2004
2004 Line Item Category Budget Allocated to Appraisal Percent of Total Allocated to Collections Percent of Total Salaries Chief Appraiser $38,000 $38,000 17.32% $0 0.00% Collection/Chief Deputy $20,400 $0 0.00% $20,400 36.33% Mapper/Deed Researcher/Appraiser $18,400 $18,400 8.38% $0 0.00% Secretary/Bookkeeper $20,400 $20,400 9.30% $0 0.00% Collection Clerk II $17,000 $8,500 3.87% $8,500 15.14% Subtotal $114,200 $85,300 38.87% $28,900 51.47% Benefits 0.00% 0.00% Health Insurance $17,000 $10,500 4.78% $6,500 11.58% Medicare $1,200 $850 0.39% $350 0.62% Retirement-TCDRS $8,500 $7,070 3.22% $1,430 2.55% Workman's Comp $850 $700 0.32% $150 0.27% Unemployment $1,800 $1,350 0.62% $450 0.80% Subtotal $29,350 $20,470 9.33% $8,880 15.81% Expenditures Appraisal Review Board $1,800 $1,800 0.82% 0.00% Attorneys Fees $500 $500 0.23% 0.00% Auditor Fees $5,000 $2,500 1.14% $2,500 4.45% Board of Directors $1,000 $1,000 0.46% 0.00% Bond/Insurance $3,700 $2,960 1.35% $740 1.32% Building Maintenance $500 $500 0.23% 0.00% Capitol Expenditures $1,000 $1,000 0.46% 0.00% City Services $1,200 $1,200 0.55% 0.00% Contingencies $4,000 $3,500 1.59% $500 0.89% DP Hardware Maintenance $1,800 $1,800 0.82% 0.00% DP Software Maintenance $8,600 $7,000 3.19% $1,600 2.85% DP Printing Service $4,500 $3,420 1.56% $1,080 1.92% Dues & Memberships $1,000 $900 0.41% $100 0.18% Education/Training $1,250 $1,000 0.46% $250 0.45% Education & Travel $1,200 $1,000 0.46% $200 0.36% Education Lodging $2,500 $2,000 0.91% $500 0.89% Electricity $4,800 $4,800 2.19% 0.00% Equipment Repairs $400 $400 0.18% 0.00% Janitorial Services $2,400 $2,400 1.09% 0.00% Microfilming Expenses $500 $500 0.23% 0.00% Mineral Appraisal $56,500 $56,500 25.75% 0.00% Natural Gas $700 $700 0.32% 0.00% Notices/Advertising $2,000 $1,000 0.46% $1,000 1.78% Office Supplies $6,000 $5,000 2.28% $1,000 1.78% Postage $15,000 $7,500 3.42% $7,500 13.36% Telephone $2,200 $1,300 0.59% $900 1.60% Vehicle oil & gas $1,500 $1,000 0.46% $500 0.89% Vehicle Repair $500 $500 0.23% 0.00% Warranty Deeds $120 $120 0.05% 0.00% Subtotal $132,170 $113,675 51.80% $18,370 32.72% Total Budget $275,720 $219,445 100.00% $56,150 100.00% Source: Jack CAD, fiscal year 2004 budget. Exhibit 6
Jack CAD Budget for 2005
2005 Line Item Category Budget Allocated to Appraisal Percent of Total Allocated to Collections Percent of Total Salaries Chief Appraiser $39,040 $39,040 18.19% $0 0.00% Collection/Chief Deputy $21,440 0.00% $21,440 30.70% Mapper/Deed Researcher/Appraiser $19,440 $19,440 9.06% 0.00% Secretary/Bookkeeper $21,440 $21,440 9.99% $0 0.00% Collection Clerk II $18,040 0.00% $18,040 25.83% Subtotal $119,400 $79,920 37.23% $39,480 56.53% Benefits Health Insurance $19,560 $11,540 5.38% $8,020 11.48% Medicare $1,200 $850 0.40% $350 0.50% Retirement-TCDRS $10,030 $7,220 3.36% $2,810 4.02% Workman's Comp $850 $700 0.33% $150 0.21% Unemployment $2,700 $2,025 0.94% $675 0.97% Subtotal $34,340 $22,335 10.40% $12,005 17.19% Expenditures Appraisal Review Board $1,500 $1,500 0.70% 0.00% Attorneys Fees $500 $500 0.23% 0.00% Auditor Fees $5,000 $2,500 1.16% $2,500 3.58% Board of Directors $900 $900 0.42% 0.00% Bond/Insurance $3,700 $2,960 1.38% $740 1.06% Building Maintenance $500 $500 0.23% 0.00% Capitol Expenditures $1,000 $1,000 0.47% 0.00% City Services $1,200 $1,200 0.56% 0.00% Contingencies $1,000 $750 0.35% $250 0.36% DP Hardware Maintenance $1,800 $1,800 0.84% 0.00% DP Software Maintenance $8,600 $7,000 3.26% $1,600 2.29% DP Printing Service $5,500 $4,180 1.95% $1,320 1.89% Dues & Memberships $1,000 $900 0.42% $100 0.14% Education/Training $1,250 $1,000 0.47% $250 0.36% Education & Travel $1,200 $1,000 0.47% $200 0.29% Education Lodging $2,000 $1,500 0.70% $500 0.72% Electricity $4,800 $4,800 2.24% 0.00% Equipment Repairs $400 $400 0.19% 0.00% Janitorial Services $2,400 $2,400 1.12% 0.00% Microfilming Expenses $500 $500 0.23% 0.00% Mineral Appraisal $58,000 $58,000 27.02% 0.00% Natural Gas $700 $700 0.33% 0.00% Notices/Advertising $2,000 $1,000 0.47% $1,000 1.43% Office Supplies $6,000 $5,000 2.33% $1,000 1.43% Postage $14,000 $7,000 3.26% $7,000 10.02% Telephone $2,200 $1,300 0.61% $900 1.29% Vehicle oil & gas $1,500 $1,000 0.47% $500 0.72% Vehicle Repair $500 $500 0.23% 0.00% Warranty Deeds $120 $120 0.06% 0.00% Subscriptions $1,000 $500 0.23% $500 0.72% Subtotal $130,770 $112,410 52.37% $18,360 26.29% Total Budget $284,510 $214,665 100.00% $69,845 100.00% Source: Jack CAD 2005 budget.
Expand the budget document that is distributed to taxing units to include the benefits and costs for each position and a list of each proposed capital expenditure.
The budget document the appraisal district sends to taxing units for them to display should contain the specific information required by Section 6.06, Tax Code, and be sufficiently detailed to give all readers a clear indication of the purposes of proposed spending.
The appraisal district's contract for appraisal services with Pritchard & Abbott, Incorporated (P&A) does not contain monitoring provisions that would improve accountability.
The district's last two appraisal service contracts with P&A covered the 2003 and 2004 tax years and the 2005 and 2006 tax years. The 2005-2006 contract was signed November 16, 2004. Under the terms of the contract, Jack CAD will pay P&A $58,000 for the 2005 tax year and $65,000 for the 2006 tax year. The 2003 and 2004 contracts were for $56,500 and $58,000 respectively. The contract requires the appraisal district to pay P&A in four equal payments of $14,500 in February 2005, May 2005, August 2005 and November 2005. For the 2006 tax year, the district agrees to pay P&A $16,250 in February 2006, May 2006, August 2006 and November 2006. Neither the previous contract nor the current contract specifies deliverables for each payment. The appraisal district will make the first two scheduled payments of the tax year before P & A will deliver appraised values and associated working papers. The CAD routinely pays the contract fees before work products are delivered.
The contract requires P&A to appraise all producing oil, gas, and hard minerals, including working and royalty interests and personal property used for exploration and production, utilities, and industrial real and personal property. Additionally, P&A is required to provide division orders showing record owners of producing minerals, recaps of values, notices of apprised values, appraisal records and appraisal rolls for the properties it appraises. P&A also agrees to defend the appraised values of properties it appraises before the appraisal review board and to secure all available information for the chief appraiser and appraisal review board to use in determining the value of a property or in equalizing values.
The contract with P&A does not contain any stated provisions tying delivery of services to payments. There are no provisions to address the possibility that work products will not be delivered in time for the appraisal district to comply with the certification mandates in the Tax Code.
In order to get the appraisal roll ready each year the appraisal district needs to have all appraisal information completed and in the appraisal district system before the appraisal notices are produced for mailing. Notices of appraised value are usually mailed in May of each year. Without appraisal services delivery dates, the district has no recourse to compel the vendor to perform the services within its most advantageous timeframe. IAAO's Standard on Contracting for Assessment Services, Section 4, requires contracts to have specific provisions, including the timeframes when services or goods are to be delivered.
The IAAO standard for monitoring contract performance requires the tax appraiser to monitor the provisions in the contract. IAAO's standard also recommends establishing a project review committee for projects that affect several departments or that have multiple objectives. A project review committee can provide the CAD with an effective mechanism for coordination, monitoring, and review. Section 5.5 states that contract monitors are generally a party hired by the agency to review the services and products provided under the contract (the monitor may also be an independent third party). An effective monitor must be thoroughly familiar with the Request for Proposals (RFP) and successful bid, and, in fact, may also have served as a consultant in developing the RFP or selection of the successful bidder. The contract monitor must stay in close contact with the project and review major tasks in a timely manner.
Revise the appraisal services contract to reflect the guidelines in the IAAO Standard on Contracting for Assessment Services.
In organizing and administering an appraisal district, the chief appraiser is responsible for hiring, firing and training personnel, for ensuring compliance with a wide range of legal requirements and for the maintenance of policies and procedures for effective appraisal district office operations. The district is also required to comply with Comptroller Rules concerning application forms and appraisal records. Specific responsibilities of the chief appraiser include: discovering, listing and appraising property; determining exemption and special use appraisals requests; organizing periodic reappraisals; and notifying taxpayers and taxing units about matters that affect their property values.
The chief appraiser is required by law to prepare and certify an appraisal roll for each taxing unit participating in the district. Certification of the appraisal roll for the 2003 tax year by the district was completed according to the law. Appraisal records and value notices were reviewed during the on-site portion of the ASR and were in compliance with State law and Comptroller Rules. The chief appraiser said that the appraisal district uses the Comptroller model forms for property reports and exemptions and special use applications.
The appraisal district has a personnel policies manual that details the district's employment policies and practices. Examples of the contents of this manual include the district's policies on travel and leave, employee performance appraisals, general employee conduct policies, the district's grievance policy and procedures and an overview of the appraisal district's employee benefits program. The manual was updated in January 2004. Each employee is issued a copy of this manual and must sign indicating receipt of the manual.
Section 23.01, Tax Code, requires appraisal districts to perform their mass appraisals in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). These standards list the elements appraisal district should incorporate and adhere to in conducting mass appraisals. Jack CAD has developed a report that details how it complies with USPAP requirements. This report is the appraisal district's appraisal policy manual. Staff can refer to this manual to explain district policies as they relate to performing mass appraisals when they meet with taxpayers and at hearings before the appraisal review board. The appraisal district develops this report annually. The chief appraiser said the district updates the report as necessary due to legal or changes in local practices.
Jack CAD's appraisal schedules are contained in a manual that the chief appraiser and field appraiser use to classify property and complete appraisals. The appraisal manual contains descriptions of property classes and pictures of actual properties in each class, value schedules for each class and the district's depreciation guide.
In addition to performing appraisals of mineral, utility and industrial property for Jack CAD, P&A is also the appraisal district's computer software provider. P&A's system is designed for Texas appraisal districts and provides an operating manual for their system, which they update annually. The manual contains instructions on how to produce reports, enter data to complete appraisals and troubleshoot for minor system problems.
The Jack County Appraisal District does not have well documented policies and procedures to guide the day-to-day operations of the district in areas such as payroll processing, accounting, purchasing and the like.
Instead, long time employees of the district use their institutional knowledge, a series of memos, notes or long-term memory to guide them through the day-to-day processes. Policies direct individual employees or a group of employees in what they must do, whereas procedures enumerate the tasks required in a duty or function and detail how the duty can be accomplished.
Well-written and organized procedures:
- implement and assure compliance with board policies as well as documenting the intent of those policies;
- protect the institutional knowledge of an organization, so that as experienced employees leave, new employees have the benefit of the others' years of experience;
- provide the basis for training new employees; and
- offer a tool for evaluating employees based on their adherence to procedures.
In the absence of well documented procedures and policies, the work of the appraisal district may come to an abrupt stop if key personnel leave a position as a result of sudden illness, death or other personal tragedies. To be effective, policy and procedure manuals are updated and kept current at all times. This means setting up a system for regular updates and distribution, as well as periodic reviews to ensure that all old policies are removed when no longer needed.
The Jefferson County Appraisal District, recently reviewed by the Comptroller's office, maintains a current and comprehensive policy and procedure manual detailing procedures for payroll, accounting, purchasing, budget, travel, bank reconciliations and similar procedures.
Develop and adopt a comprehensive policy and procedures manual for appraisal district operations.
Appraisal districts across the state have begun to use technology to provide detailed property and appraisal records that are easily accessible to staff and the public. These information technology systems allow staff to effectively manage data on individual properties and make decision-making in the appraisal process more efficient. Automated systems enable the appraiser to consider several variables simultaneously in completing an appraisal, usually resulting in a more thorough and accurate appraisal.
Jack CAD uses generally accepted methods and sources to gather market data. The appraisal district gathers data from several sources including realtors, appraisers, deed filings and builder's permits. In addition, the district sends sales verification letters to buyers and sellers. The buyers and sellers are typically identified by reviewing deed filings, which the district receives monthly.
The appraisal district conducts ratio studies at least twice annually. The district's automated appraisal system allows it to perform studies on demand and on any property strata that it defines. The system allows flexibility, which the Jack CAD uses by performing ratio studies by taxing unit, then by category within the unit, then by property class within the property category and then within market areas. The district uses the ratio study results to evaluate its appraisal performance and to adjust property values according to the market. Modifiers are applied in specific areas to reflect market value changes unique to the area opposed to changes throughout the entire property category or subclass.
Jack CAD does not have a written plan or target date to complete the integration of its geographic information system with its appraisal system.
Jack CAD began this mapping project in 2000. Maps of the entire county are available and about 70 percent of the work necessary to verify deeds with parcel information on the maps is complete. The appraisal system and the map system have not been integrated yet and even though the appraisal staff works with computer laptops while conducting fieldwork, the maps that appraisers use are available in hard copy only and do not contain all of the property characteristics that can influence value.
The district's goal is to integrate the appraisal system with the geographic information system. Once integrated, the system will allow appraisers to visually analyze properties in relation to nearby properties and their traits and characteristics that influence value. The system will allow the appraisers to access all the data needed in order to analyze sales and make comparisons to similar properties. The integrated system will allow appraisers to make more accurate appraisals since the appraiser will be able to review all of the available data on the property as it is layered over an actual photograph or map of the property. This will ease compliance with Section 23.01, Tax Code, which requires appraisers to consider the individual property characteristics of a property in performing an appraisal.
Combined with detailed aerial photographs, an integrated system would allow appraisers to measure properties and make appraisal decisions on individual properties without physically inspecting the property. This would be particularly useful in cases where the appraiser's access to a property is limited. Likewise, an integrated system can aid the appraiser's analysis of properties in an area by comparing a previous year's maps and photos to current maps and photos.
The integrated system will encourage more effective sales and market analyses. The appraisal district can quickly perform ratio studies by grouping or stratifying properties with similar physical characteristics, regardless of their geographic location in the appraisal district. An additional benefit from more effective market analysis is quick updates to the CAD's appraisal schedules.
The 2003 PVS indicated that Category D/E property was under-appraised. The chief appraiser said that the market for properties in Perrin-Whitt CISD that are located outside Jack County is different than the market for most properties within the county's boundaries. The chief appraiser expressed a concern about giving an appearance of selective reappraisal if the district raises values only on the properties outside Jack County. Market analyses using the computerized map system integrated with the appraisal system might enable the district to identify properties throughout the appraisal district that are part of the same market neighborhood as those in Perrin-Whitt CISD that happen to be located outside Jack County.
The integrated system can be an aid for appraisal review boards. Review board members can examine properties and analyze them in relation to surrounding properties during hearings and deliberations.
Develop an implementation plan and timeline to complete the integration of the district's appraisal and geographic information systems.
Personnel and human resources management are a critical function of appraisal districts. Successful management of personnel includes efficient recruiting, hiring, classification and compensation, benefit administration, training and development, and performance evaluation. Compliance with equal employment opportunity statutes and other applicable federal and state laws and the establishment of fair and workable policies, procedures and training are important for the recruitment and retention of competent staff.
The appraisal district has five employees, two of which only perform collection and customer service functions. Two of the other three employees, including the chief appraiser, perform appraisals. The other employee supports the chief appraiser and field appraiser with administrative tasks, entering data, coordinating the review board activities and assisting with customer and technical assistance. All of the employees are registered with the Board of Tax Professional Examiners. The two staff members who perform the collection function and the staff member who provides administrative support for the appraisers are registered in the tax collector tract. The chief appraiser is a Registered Tax Assessor (RTA) and Registered Professional Appraiser (RPA). The field appraiser holds a Class III license and is scheduled to obtain the RPA in 2007.
The Jack CAD staff is shown in Exhibit 7.
Jack County Appraisal District Positions,
Experience and Certifications
Position BTPE Certification Years with Jack CAD Chief Appraiser RPA 23 years Mapper/Appraiser/
Class III 3 years Chief Deputy Collector RTA 7 years Secretary/Bookkeeper RTA 7 years Collection Clerk Class II Collector 6 years Source: Jack CAD.
The chief appraiser has been employed at the appraisal district almost from its inception. The other staff has an average tenure of about six years. The chief appraiser said cross training has allowed the district to function effectively while keeping the number of staff low. The chief appraiser also stated that local relationships she has developed over her 23-year tenure, along with the number and the nature of the improvements, enable her to keep values current with only one other appraiser on the staff.
The Jack CAD personnel manual does not address issues such as employment at-will and federal employment guidelines dealing with the Family Medical Leave Act (FMLA) and the American with Disabilities Act. The 12-page manual addresses Equal Employment Opportunity (EEO), grievance procedures and performance appraisals, leave and holiday policies, health insurance and retirement, probationary periods, travel, meals, breaks, and work rules and discipline. The manual was adopted on January 5, 2004 and requires employees to sign a receipt that they have received the manual. The manual has not been updated since 2004.
The district's manual also does not address issues of ethics, conflicts of interest, office security and use of office resources.
Personnel policy and procedures manuals help organizations define issues such as attendance, performance, insubordination, and leave policies and ensure management and staff understand their roles and responsibilities. Good policy and procedure manuals protect both management and staff from arbitrary practices and provide procedures to help management conflicts that may arise from day to day operations.
The Nueces CAD, for example, has a well-written and comprehensive personnel policy and personnel manual that explains the district's policy as an at-will employer and covers federal employment guidelines dealing with the FMLA. The manual also describes guidelines for employee behavior in dealing with customers and guidance on the use of district equipment including telephones and Internet access.
Expand the district's personnel manual to address current employment and federal laws.
The Texas Constitution requires all taxation be equal and uniform. The Tax Code requires all property to be appraised at its market value as of January 1 of each year and the tax appraisal industry recognizes three approaches to determine value: cost, income, and market. In addition, the Tax Code requires the chief appraiser to consider all three approaches to value, but to use the method most appropriate for appraising a particular property at its market value.
Jack CAD has established an appraisal performance threshold policy for determining when to reappraise. It is the appraisal district's policy to reappraise categories of properties whose level of appraisal falls below .95 as indicated in local ratio studies.
According to IAAO's Property Appraisal and Assessment Administration, a ratio study is a study of the relationship between appraised value and market value. A key element in a ratio study is the level of appraisal. The level of appraisal gives a good indication of where the appraisal district's values are relative to market value.
Jack CAD's computerized appraisal system allows the appraisal district to evaluate its appraisal performance through ratio studies within and among property classifications. The chief appraiser said that the appraisal district runs ratio studies within property classes, by school district and countywide at least bimonthly. The chief appraiser said the district uses the ratio study results for reappraisal decisions and annual value maintenance. When the ratio for a property type falls below .95, the appraisal district develops new appraisal schedules for that type of property.
Frequent ratio studies, reappraisals and appraisal maintenance enable an appraisal district to keep values at or near the market. Appraisal districts use ratio studies to complete appraisal maintenance programs. Ratio study results can also be used to determine when appraisal schedules can no longer accurately predict market value. Ratio study results can help determine whether market area modifiers are necessary. The results also indicate the amount of the modifier(s). However, while ratio study results are helpful in developing measure to keep values representative of the market, the use of modifiers may indicate that base appraisal schedules should be updated.
The appraisal district has established an appraisal performance threshold policy to identify when to revise base appraisal schedules.
The appraisal district uses an out-of-date schedule to appraise non-rendered accounts.
Since 2003, all businesses with personal property must render the property to the local appraisal district. However, all personal property account owners do not render their property to the district as required by law. This poses a problem for completing appraisals of personal property as the appraiser must still discover, list and appraise the property annually.
Jack CAD uses an appraisal schedule that contains per square foot costs for various building classes and a depreciation guide. Using this type of guide is consistent with generally accepted appraisal procedures. Local policy, however, also includes using cost tables from the 2003 PTD Field Appraiser's Guide. This guide is now two years old and the PTD field staff no longer use this guide, as it was limited in its applicability to property types when originally published. It is now considered out-of-date, unless adjusted by the users.
PTD's current trend and depreciation schedules for personal property are based on data provided by Marshall & Swift/Boeckh. These trend and depreciate schedules are not distributed because of copyright regulations.
As an alternative to developing appraisal schedules for every type of personal property type, some appraisal districts and the PTD purchase personal property schedules through an annual subscription to an appraisal service such as Marshall & Swift/Boeckh. An annual subscription to a service that develops these schedules, when properly applied, can produce more current values for personal property.
Use only current appraisal schedules or trend and depreciation tables to verify renditions and appraise personal property accounts.
Jack CAD does not have a written reappraisal plan.
State law requires appraisal districts to implement a plan for a complete reappraisal of all real property at least once every three years. The chief appraiser said the district physically inspects all property annually. She said the district evaluates appraisal performance with ratio studies and reappraises properties each year if appraised values no longer represent market value. The district has not, however, developed a step-by-step plan that describes how it conducts appraisal evaluations or develops new appraisal and depreciation schedules.
A reappraisal plan is a roadmap for performing the work of a reappraisal. It is also a communication tool that shows the appraisal district board of directors how the appraisal district staff plans to accomplish its appraisals, and if the board chooses to require the chief appraiser to submit the plan for approval, the board can direct the appraisal activities by amending the plan.
According to USPAP Standard 6, a functional reappraisal plan includes the following activities:
- identifying properties to be appraised;
- identifying and updating in the appraisal records the relevant characteristics of each property to be appraised;
- defining market areas;
- identifying property characteristics that affect property value in each market area;
- developing an appraisal model that reflects the relationship among the property characteristics affecting value in each market area;
- calibrating the model to determine the contribution of the individual property characteristics affecting value;
- applying the conclusions reflected in the model to the characteristics of the properties being appraised; and
- reviewing the appraisal results.
The USPAP, Standards Rule 6-2(g), requires appraisers to "identify the characteristics of the properties that are relevant to the purpose and intended use of the mass appraisal, including:
(i) the group with which a property is identified according to similar market influence;
(ii) the appropriate market area and time frame relative to the property being valued; and
(iii) their location and physical, legal, and economic characteristics."
To comply with this standard, appraisal districts typically record property characteristics that include, but are not limited to, the Comptroller's property category code; the location and market area of property; the physical attributes of the property such as the size, age, condition, and construction type; the number of various kinds of rooms such as bedrooms, bathrooms, etc.; the presence of amenities such as central air conditioning; any legal and economic attributes or restraints; and the presence of easements, covenants, leases, special appraisals, ordinances or other legal restrictions.
A thorough reappraisal plan discusses in detail how and when the district plans to perform each of the activities mentioned above. A detailed reappraisal plan, if executed properly, would help ensure that values in each school district are valid in the PVS, thereby avoiding the possibility of a school district receiving less than the expected amount of funding from the state. A detailed and properly executed plan would also ensure that taxpayers are treated uniformly in the payment of property taxes.
Develop a detailed reappraisal plan that, at a minimum, includes the essential steps in the process, explains exactly how and when the steps will be executed, outlines training and explains how sufficient resources will be allocated to follow the plan.
The district does not annually inspect all personal property parcels.
Section 1.04(4), Tax Code, defines personal property as property that is not real. Section 1.04(5) further identifies the tangible personal property as something "...that can be seen, weighed, measured, felt, or otherwise perceived by the senses..." but is something other than a document or other instrument that conveys an interest or right but itself has no value. The best examples of taxable tangible personal property are the furniture, fixtures, equipment and inventory of businesses used for the production of income.
The nature of personal property means that it is usually very mobile and often only temporarily kept or stored at a location. The mobility and temporary status of personal property parcels make their discovery and classification among the most challenging problems for tax appraisers. Annual physical inspections to discover, list and classify personal property and to verify rendered amounts are essential to ensure that property does not escape taxation. In addition, the quantity and condition of personal property at any location regularly changes. The inspection process, therefore, further helps to ensure appraisal equity and equal taxation.
Section 22.01(a), Tax Code, requires the owners of tangible personal property held for the production of income to annually render a good faith estimate of the market value of their property to the chief appraiser. These good faith estimate renditions are solely required to comply with Section 22.01(a) and are inadmissible in hearings and suits. Nonetheless, these renditions are crucial elements in the personal property appraisal process as most personal property parcels are appraised at the value contained on the rendition.
The Jack CAD personal property appraisal process involves appraisers comparing the rendered value to an independent value that district appraisers develop using the appraisal district's schedules. If the values are consistent, the appraisal district staff uses the rendered value. Significant differences between locally developed values and the rendered values are reconciled by comparing the local value and rendered values for similar properties. If, in those situations, the appraisal district's values are consistent with the rendered and appraised value of similar properties, the appraisers use the local value.
The appraisal district's personal property appraisal process is an accepted procedure. This process, however, requires appraisers to physically inspect personal property parcel locations to verify the accuracy of rendered amounts and to ensure that the appraisal district's property descriptions are accurate. Even if the appraisers apply an acceptable procedure to determine the value, if the property descriptions in the appraisal district's records are inaccurate, the appraised values will not reflect the amount, nature and condition of the personal property as it exists. Physical inspection is the only way to make sure appraisal district records are accurate.
Implement a plan to annually inspect all personal property parcels.
Jack CAD's market research and analysis does not allow effective delineation of the local market for land.
The chief appraiser said land sales in the Perrin-Whitt CISD are influenced by their proximity to Fort Worth. The closer a property is to Fort Worth, the higher its selling price. In addition, the chief appraiser said that sales of land in the portion of Perrin-Whitt CISD that is outside the Jack County boundary are higher than land sales within Jack County. This has presented the appraisal district with a dilemma in deciding whether higher price per acre land sales establish a trend in the market or whether the properties outside Jack County represent a separate market. An additional concern with these properties is determining their value without selective reappraisal. The chief appraiser said they see very little return on sales of vacant lots, but work with what they receive.
To adequately identify markets, appraisers must research the details of sales to identify all pertinent characteristics in order to establish market areas and to identify those property characteristics that influence value. Appraisers conduct this research so they can group all similar properties that will be appraised using the same mass appraisal model.
Appraisal districts use various methods to stratify properties in an attempt to group similar properties in similar markets. Some appraisal districts plot sales on maps to determine if markets are influenced by physical boundaries, location or topography. Additional research often focuses on, but is not be limited to, factors such as planned use, road access, financing, view, and access to water for recreational purposes. Using the results of this research, appraisers can identify the boundaries of each market and/or the property characteristics that influence value, and perform ratio studies of each market to determine whether or how much to adjust or modify local schedules. Integrating the detailed maps in the appraisal district's geographic information system may help make the system more effective and efficient.
Research the details of all land sales to identify all market influences then stratify all similar properties subject to the same market influences.